Failed Debt Consolidation. Now What?
It’s possible that you are facing a variety of different bills that just seem to keep building.
The first thing to be aware of is that you are not alone here.
A lot more people than most realize will end up in debt at some point during their life.
Some individuals such as those who buy property, are self-employed or suffer from a long term injury are more at risk than others.
You might then turn to debt consolidation as an option to deal with the growing costs.
Debt consolidation sounds like an attractive choice on paper.
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First, you can bundle all your debts together so you won’t need to worry about missing any payments.
Second, and perhaps more importantly, you can often gain a lower level of interest.
So the cost isn’t building as quickly anymore.
But the debt still remains and it needs to be paid off.
Your debt isn’t actually reduced, it’s just growing at a slower rate.
So the first thing that you need to do is set a budget.
It’s important that you can make payments on your debt consolidation plan and keep up with the debt that you still need to pay off.
Why Will Debt Consolidation Fail?
There are numerous risks associated with debt consolidation.
To understand the next step, you first should be aware of the issues that you can run into.
First, it’s possible that debt consolidation was never the right choice because you weren’t able to access an option that provided a low level of interest.
Don’t forget this is a second loan to cover your debts so the lower interest is the main selling point.
If it’s the same rate of interest or even a higher rate a plan like this is always going to be more trouble than it’s worth.
Second, it’s possible that there was a debt that you couldn’t consolidate.
This meant that there were still creditors that were charging you big interest rates and that’s where the issues begin.
You have two choices if you fail debt consolidation.
You can file for bankruptcy and this could be the right choice if you have virtually no assets and a low income.
Alternatively, you can explore a consumer proposal.
This is a way to reduce your debt by making an offer to your creditors if you are unable to pay them back in full.
Both provide benefits, will ensure that you get the relief you need and crucially provide protection against legal action from creditors.
If you are interested in learning more about what happens if you fail debt consolidation and the alternate possibilities available to you, please do make sure that you contact us today.
We have helped more than a hundred thousand Canadians escape their debt and we are confident we can help you too.
You can call us on the phone or alternatively fill out a free evaluation online.